Shareholder Activism: More Settlements, Fewer Fights

Shareholder activism has been on the rise for several years and shows no sign of abating. As corporate Canada adapts to this new reality, we are seeing an evolution, both in activist tactics and in how boards respond to activist overtures.

Activists are increasingly looking to achieve positive change through agreed measures short of a change of control, rather than by highly personalized "winner-take- all" campaigns. Likewise, incumbent boards are increasingly responding to activist overtures through dialogue with a view to finding common ground that addresses legitimate concerns, rather than with a reflexive defensive approach. This more nuanced approach is consistent with a board's fiduciary obligations; it leads to a settlement where there is a reasonable settlement to be made; and it best positions the board for a successful defence to activist attack where a fight to the finish is warranted in the interests of the corporation. We think this trend will continue.